Practical Insights (Blog)

What are the most significant challenges that food processors and manufacturers face now?

Steve Buchanan: It’s well known that margins in grocery stores and supermarkets are lower than in almost any other industry, so increases or decreases in production costs cannot be reflected in end-product price without the danger of losing shelf space, location, or even possibly an entire account. Production efficiency becomes more important than in nearly any other industry.

How mature are chemical companies in terms of unlocking the potential of sales and operations planning (S&OP)?

Peter Robinson: Based on my exposure to a number of chemical companies and looking at their inventory profiles (raw material and finished goods), most of them are not at all advanced in S&OP. They are not taking seriously the need for an S&OP process and not getting the end-to-end supply chain involved in operations planning. Ultimately they need a single game plan that all stakeholders buy into so that true discipline may be imposed on what is manufactured. More importantly, the game plan must reflect what they sell: chemical products. Not manufacturing them. That is how working capital and inventory are optimized.